China Hearsay (welcome back, Stan!) just posted on how parents of some Chinese children who “died or became ill after drinking infant milk formula contaminated with melamine say they will sue a subsidiary of a Chinese milk powder manufacturer based in the U.S. state of Maryland.” The basis for suing in the United States is that “Qingdao Shengyuan Milk Co. Ltd., a dairy products manufacturer based in the eastern China city of Qingdao, had a Delaware-registered investment subsidiary with offices in Maryland, rendering it subject to U.S. law.”
The story comes from Radio Free Asia, and a parent claims to have “a Maryland-based lawyer who will represent us in this collective compensation suit.” The article then talks about how the parents are “willing to pay for the legal fees and expenses” and the parents have already been requested to “send initial legal fees” and the “U.S. lawyers were hoping for a preliminary hearing in a Maryland district court soon.”
China Hearsay questions how such a law suit can be brought in the US against “the U.S. subsidiary of a Chinese enterprise based on a tort that occurred in China” and calls it “kinda weak from a jurisdictional standpoint.”
Without knowing all of the facts, it is always difficult to comment on any case, but since I am blogging here and not giving a legal opinion to a client, I can say that this story is behind “kinda weak.” It makes no sense at all.
First off, it is quite unusual for a plaintiff’s law firm that handles $100 million lawsuits (that is how this one is described) on a contingency fee basis (also so described) to require its clients to pay initial expenses. Second, I find it very strange that the US lawyers are “hoping for a preliminary hearing in a Maryland district court soon.” Plaintiffs should not be wanting a preliminary hearing as that hearing is likely going to be an attempt by defendants to get the case thrown out for lack of jurisdiction. And that is the third thing. I just do not see how a US court can assert jurisdiction over a tort claim involving a Chinese defendant, a Chinese plaintiff, and a tort that happened in China. I also do not see the basis for suing the US subsidiary of a Chinese company.
Now there are two potential arguments that can be made here, neither of which am I terribly familiar. One is that the courts of China are so corrupt they are rejecting these cases, therefore, the US court needs to take this on. A few years back, I was representing a Russian company in Alaska Federal Court against a US plaintiff who seized my client’s vessel when it came into Alaska. After we convinced the Court to release the vessel, the American plaintiff asked the Court to hold onto the case against my Russian client because of a purported inability to receive a fair trial in Russia. I argued that if the US were to take on every case involving claims arising in a country with a corrupt legal system, the US would end up trying all of Nigeria’s tort cases. I won.
The other possible argument I see here is to make a claim under the Alien Tort Claims Act. There are maybe three people who understand that act and I know only one.
I am betting nothing much ever comes of a US lawsuit, but we will be monitoring the situation and reporting back. Any tort lawyers out there who think differently?

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Dan Harris

I am a founder of Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, China and Spain.

I mostly represent companies doing business in emerging market countries. It has taken me many years to build my network and it takes constant communication and travel to maintain it. My work has been as varied as securing the release of two improperly held helicopters in Papua New Guinea, setting up a legal framework to move slag from Canada to Poland’s interior, overseeing hundreds of litigation and arbitration matters in Korea, helping someone avoid terrorism charges in Japan, and seizing fish product in China to collect on a debt.

I was named as one of only three Washington State Amazing Lawyers in International Law, I am AV rated by Martindale-Hubbell Law Directory (its highest rating), I am rated 10.0 by AVVO.com (its highest rating), and I am a SuperLawyer.

I am a frequent writer and public speaker on doing business in Asia and I constantly travel between the United States and Asia. I most commonly speak on China law issues and I am the lead writer of the award winning China Law Blog (www.chinalawblog.com). Forbes Magazine, Fortune Magazine, the Wall Street Journal, Investors Business Daily, Business Week, The National Law Journal, The Washington Post, The ABA Journal, The Economist, Newsweek, NPR, The New York Times and Inside Counsel have all interviewed me regarding various aspects of my international law practice.

I am licensed in Washington, Illinois, and Alaska.

In tandem with the international law team at my firm, I focus on setting up/registering companies overseas (via WFOEs, Rep Offices or Joint Ventures), drafting international contracts (NDAs, OEM Agreements, licensing, distribution, etc.), protecting IP (trademarks, trade secrets, copyrights and patents), and overseeing M&A transactions.